Confused by workplace pension tax relief

waveyjane

Not sure if this about pensions or tax, or both but I'll post here.

I'm told that for my pension, the company contribution is a net deduction and my contribution is done by salary sacrifice.

I think I'm right that because the net deduction bit is taken from my pay after tax and NI is calculated, then the I get basic rate tax relief on that pension deduction.

If I'm a higher rate tax payer, I think I can claim the remaining tax relief from HMRC. If so, can I just write to HMRC to claim it?

But what figures do I give to them? If I look at my payslip, there is a figure called "Employee Contribution" at the top (as a deduction from my basic pay), and I can see "Employers Contribution" at the end after all the other deductions like PAYE.

Do I just quote both figures (for the previous tax year) and let them work it out?

rumpetroll

Both Net Pay and Salary Sacrifice pension contributions are done prior to being taxed so there is no additional tax relief for you to claim.

Linton

Salary sacrifice works by cutting your salary so your employerr can pay more into your pension.  Since you have a lower salary you pay less tax, possibly reducing your pay to below the higher rate tax band.  As you personally dont pay any pension there is no tax to be refunded.

Strummer22

If it's done by salary sacrifice then there's no further tax relief to be paid. The rest of what you said doesn't make sense if it's salary sacrifice.

Your payslip should have "total gross pay" which is your total salary, and "gross for tax" which is the amount after salary sacrifice, which you are taxed on. If the difference between these two is equal to your employee pension contribution, then you have a salary sacrifice pension and you have already received full tax relief.

Albermarle

waveyjane said:

Not sure if this about pensions or tax, or both but I'll post here.

I'm told that for my pension, the company contribution is a net deduction and my contribution is done by salary sacrifice.

I think I'm right that because the net deduction bit is taken from my pay after tax and NI is calculated, then the I get basic rate tax relief on that pension deduction.

If I'm a higher rate tax payer, I think I can claim the remaining tax relief from HMRC. If so, can I just write to HMRC to claim it?

But what figures do I give to them? If I look at my payslip, there is a figure called "Employee Contribution" at the top (as a deduction from my basic pay), and I can see "Employers Contribution" at the end after all the other deductions like PAYE.

Do I just quote both figures (for the previous tax year) and let them work it out?

There are three different ways to make pension contributions from your salary and you have mentioned/mixed all three in your post.

If it really is a salary sacrifice, another way to check is to go the pension providers website. Have a look at the monthly contributions and you should only see one each month from your employer and no contribution from you.
The employer payment into your pension is made up of their contribution and how much you have sacrificed from your salary, combined.

If you see that there are two contributions each month, one from the employer and one from you, then it is not salary sacrifice.

waveyjane

OK so I think that's clear then - the amount I see at the pension provider's end is a single monthly figure so I take it that's salary sacrifice.

The thing that confused me was that when I asked the HR department if the pension was salary sacrifice, they said:

"Please be informed that only your contribution is done by salary sacrifice." (my emphasis)

So I assumed their contribution was something I'd need to claim the extra relief on as I'm a higher rate tax payer. But that seems it's not the case.

Albermarle

waveyjane said:

OK so I think that's clear then - the amount I see at the pension provider's end is a single monthly figure so I take it that's salary sacrifice.

The thing that confused me was that when I asked the HR department if the pension was salary sacrifice, they said:

"Please be informed that only your contribution is done by salary sacrifice." (my emphasis)

So I assumed their contribution was something I'd need to claim the extra relief on as I'm a higher rate tax payer. But that seems it's not the case.

There is no tax relief on the employer contribution. 

Aretnap

waveyjane said:

OK so I think that's clear then - the amount I see at the pension provider's end is a single monthly figure so I take it that's salary sacrifice.

The thing that confused me was that when I asked the HR department if the pension was salary sacrifice, they said:

"Please be informed that only your contribution is done by salary sacrifice." (my emphasis)

So I assumed their contribution was something I'd need to claim the extra relief on as I'm a higher rate tax payer. But that seems it's not the case.

No, with salary sacrifice your employer agrees to reduce your salary by (say) £1000, and pay an extra £1000 into your pension as an employer contribution instead.

The employer contribution is paid directly from your employer straight to your pension. The taxman never sees it - as far as he is concerned it never becomes "your" money (well, not until you withdraw it from your pension in a few years/decades at any rate).

As it's money that isn't subject to tax, there's no tax relief to claim on it either.